Well, it's more an indication of bandwidth, which in turn impact fees. It is ability to pay the fees that impacts how often people can use L1.

A block size increase would be negative since it would reduce the decentralization aspect, demonstrated in the Block Wars. Without a strong decentralization, the store of value will change to reflect the worsened security; downward.

Besides, an increase in bandwidth will still cause the mempool to be filled up with anything the market is willing to spend XYZ on in regards to tx costs.

The ability and willingness to pay for expensive transactions is the primary driver of fees.